In April it was discovered that the Vatican’s treasury had put 20 million euros (around $24 million) in pharmaceutical companies that produce the “morning-after pill.” The Vatican was investing in abortion.
Rather than blaming the investment on his officials at the Vatican bank, Pope Francis took responsibility for the scandal. He published a motu proprio, a legal declaration of the Church, stipulating that members of the curia are “not to hold, to the best of the declarant's knowledge, shareholdings or interests of any kind in companies or firms operating for purposes and in sectors contrary to the Social Doctrine of the Church” (Section 1.e).
The USCCB updated its guidelines for socially responsible investments accordingly:
The entangled web of corporate relationships that is today’s economy almost makes it impossible to know all the effects investing in a single company, specific security, or investment fund can produce. Nevertheless, we must do all we can to assure that we invest in those corporations and institutions that promote human dignity and enhance the common good. (Part I, Section II)
Putting money behind one company rather than another implicitly supports how that company produces things. Taken together, the pope and the American bishops have issued a clear challenge to Catholics: not only to limit investment to products that enhance the common good but to corporations that do the same. Investing is not a neutral affair.
The motu proprio and the USCCB’s updated guidelines put legal power behind Saint John Paul II’s teaching that investments must actively build up the Kingdom of God. The Saint teaches in Centesimus Annus, “...even the decision to invest in one place rather than another, in one productive sector rather than another, is always a moral and cultural choice.”
Investments are both moral and cultural acts because they physically change the order of society for better or worse.
Are we doing good with our investments? Few of us know what is in our portfolios; most of us are like Pope Francis, completely unaware of what we’re funding. A fund manager, a financial planner, or a knowledgeable friend tells us what to do, and we invest. But given the chaos of our modern culture, we should be more determined than ever to know just what our money is supporting; to know that we aren’t giving our hard-earned wealth to corporations that increasingly attack and degrade the family and the Church.
The very existence of specifically Catholic investment funds shows that Catholics are concerned, and at least a little guilty, over blind investment. We recently published a study of what Americans are (blindly) investing in, usually through their 401(k)s. As you may expect, there are some unsavory companies there. But the Catholic funds established to address this problem are not much better.
S&P Catholic Values ETF
The largest Catholic ETF (a basket of various stocks) is called the S&P Catholic Values ETF (abbreviated: CATH). Currently, over a half billion dollars is invested in this fund. Its managers state: “CATH excludes companies involved in activities perceived to be inconsistent with Catholic values as set out by the U.S. Conference of Catholic Bishops, including screens for weaponry and child labor.” And yet five of the fund’s largest holdings are in companies actively fighting lawsuits for utilizing child-labor—from children as young as six years old. Apple, Microsoft, Alphabet Inc-CL A and CL C (Google), and Tesla have all been caught red-handed using child labor in the Dominican Republic of the Congo, where half of the world’s known cobalt mines are found. According to the cited reports, these children are not merely battered and bruised—a dozen of them have recently died.
Apple, Microsoft, Google, and Amazon (CATH’s second largest holding) utilize slave labor. The Chinese communists demonstrate no exception to the communism we know of history, enslaving people and even conducting large scale genocide—this time of the muslim minority Uyghur population. By partnering with companies such as Xiamen Dragon Information Technology Co., which manage forced labor in the camps, these major American corporations are participating in evil.
Those who hold CATH invest in Starbucks Coffee, a company that heavily promotes the LGBTQ+ movement and, according to Dispatches investigative journalism, utilizes child labor to pick their beans in Guatemala. These children, as young as eight, work 50 hours per week in “grueling conditions,” typically earning less than $5 a day. Most people are familiar with the argument that, given the alternative of poverty, such wage contracts may be a relative boon for those who enter into them. But the blind investor does not know whether the alternative is, in fact, poverty. He does not know whether the contracts are just. He does not know whether Starbucks Coffee promotes human dignity or degrades it, for the simple reason that the blind investor rarely knows he is invested in Starbucks Coffee to begin with.
CATH also invests in Berkshire Hathaway. According to Capital Research Center, Warren Buffett, Berkshire Hathaway’s CEO, has donated $4.1 billion of its stock to Planned Parenthood in a span of eighteen years—and in past years has donated through the company itself. Buffet has also given $112 million to The Guttmacher Institute, a pro-abortion think tank affiliated with Planned Parenthood, and $293 million to the National Abortion Federation, a coalition of abortion providers that supports loosened restrictions on abortion. Shockingly, six other companies in this fund donate to Planned Parenthood as well, both through employee matching programs and on their own initiative: Microsoft, Electronic Arts, Amex, JP Morgan, MasterCard, and Oracle. With every purchase of stock through CATH, Catholics increase the wealth of Planned Parenthood.
CATH invests in companies such as Walgreens/Boots, CVS, Cardinal Health, Anthem, and Cigna, all of which produce or cover contraceptives and abortifacients, and which make up over 6% of the fund.
CATH holds a substantial percentage in usurious banks. For many people, usury is a forgotten sin, irrelevant to the changed conditions of modern capitalism. But sometimes the injustice is obvious. Banks like Wells Fargo and Bank of America target poor and often minority populations, partnering with and funding small, predatory lenders that charge up to 400 percent on loans. Even US Bank’s comparatively modest interest rate of 71 percent, which they charge directly, should fall under the Catholic condemnation of usury; yet CATH invests in them as well. And the nefarious activities of these regional and national banks that CATH invests in are well documented; from coordinated serial evictions of poor neighborhoods to hiding drug money. Twenty years ago, the DOJ estimated that the proceeds from the narcotics trade entering the US banking system were between $500 billion–$1 trillion annually—more than 5% of the US GDP. Subsequent federal projections have maintained these numbers. When the government does uncover such compliance with drug cartels, as in 2010 when Wells Fargo failed to investigate a single transaction of $378.4 billion, the consequences are slight: the Feds fined Wells Fargo $160 million—not even the equivalent of the bank’s transaction fee (usually 0.1% for a transfer that size).
The trouble with investing in investors is that one exponentially expands the number of institutions one knowingly or unknowingly supports. CATH financially assists JP Morgan, and JP Morgan financially props up OnlyFans—an application that enables people to access pornography and encourages others to produce it themselves. CATH also holds Goldman Sachs, a company infamous for the mortgage fraud of the 2000s and more recently a book runner for Alibaba’s IPO (they bought Alibaba stock directly instead of indirectly). Alibaba is China’s version of Amazon and Facebook and is largely responsible for the programmatic inculcation of citizens into the Chinese Communist system. Through it, the Chinese government has swept nearly 2 million Uyghurs and others into indoctrination camps, monitoring them with Alibaba’s broad surveillance dragnet, replete with facial recognition and genetic testing. The United States government has denounced the program and penalized Chinese companies believed to be involved, but American banks, through investments such as CATH’s, helped build it.
CATH also invests in Hilton International, which runs and operates casinos and adult entertainment; Activation Blizzard and Electronic Arts (EA), which create violent and sexually provocative video games; Facebook, which has begun to co-opt our political freedoms, illegally crush competition, and leak people’s data for gain; Twitter, which is doing the same; and Disney, a politically active media monopoly.
As a whole, New Polity determines that 39% of the fund holds companies that oppose Catholic social principles (by direct and non-remote participation in unjust acts). The world built up by CATH is not a Catholic one, by any stretch of the imagination.
Ave Maria Mutual Funds
The largest Catholic Mutual Fund is Ave Maria’s Growth Fund (AVEGX), which has over $1 billion in it. The fund managers identify as “value investors utilizing proprietary criteria to screen out companies that promote or support activities contrary to the core moral teachings of the Catholic Church.” For this reason, many Catholic universities and charities offer this account for their employees’ 401(k) programs. While the holdings in this account are noticeably better than CATH, about 27% of them are still obviously opposed to Catholic Social Doctrine. They too invest in Microsoft with its DRC cobalt mines, its forced labor of Uyghurs in China—and their regular big gifts to Planned Parenthood and the LGBT movement.
The mutual fund is a victim of what the USCCB called the “entangled web of corporate relationships.” Ave Maria proudly does not invest in Apple, Wells Fargo, and Alibaba, but they do invest in Blackrock—an investment firm that holds billions of dollars in precisely these companies. Indeed, according to CNN, Blackrock is the third largest investor in Apple. Besides this, Blackrock is also a corporate sponsor of National LGBT Chamber of Commerce, and its executives also donate heavily to Planned Parenthood, putting Ave Maria in the precarious situation of avoiding investing in the culture of death by investing in companies whose profits are subsequently invested in propping it up.
Additionally, over 5% of AVEGX is invested in S&P Global Inc and 3% of the fund is composed of Moody’s Corporation, both of which were indicted by the US Justice Department for providing the fraudulent mortgage rating schemes that big banks needed to manipulate the housing market in the 2000s. According to the Wall Street Journal, these companies are doing it again with assets throughout the market economy. This fraud leads to greater wealth inequality as the prices of assets, which are owned by the wealthiest individuals, inflate.
Ave Maria also invests in Medtronic, a medical technologies company. Medtronic has a long history of providing fraudulent accounting numbers to boost lines of credit and investment at the expense of the integrity of their products. In 2015, the US Justice Department sued Medtronic after it was discovered that they compelled certain physicians to submit false claims to federal health care programs for a medical procedure. In India, regulators uncovered their practices of price-gouging. Chinese authorities fined it for monopolistic practices. The company was discovered to be bribing doctors in Europe. After all of this, Medtronic pledged integrity. But according to the International Consortium of Investigative Journalists, in the 10 years since the company made this pledge, “governments on four continents have accused Medtronic of promoting unauthorized uses of products, defrauding government health programs, fixing prices, paying doctors for favorable studies and engaging in anti-competitive conduct.”
Perhaps one of the more surprising companies in the fund is MasterCard, which is a huge corporate partner of the National LGBT Chamber of Commerce, matches employee donations to Planned Parenthood, and secures payments for OnlyFans. When OnlyFans briefly considered banning pornography from their app, MasterCard was the only payment company that distanced themselves from the decision.
The success of Ave Maria is in some respects an encouraging sign: Catholics have a guilty conscience when it comes to blind investment and are looking for solutions. But transferring our obligation to discern the goodness of our investments from one company to another has not, to date, solved the problem. Ave Maria may be the best Catholic option for faithful investors–it is by no means a good option. Indeed, it may very well be the case that it is not the errors of this or that company but blind investment itself that needs correction.
Knights of Columbus Funds
Other popular accounts that Catholic organizations often invest in come from the Knights of Columbus, such as their Large Cap Value (KCVIX) and their Large Cap Growth (KCGIX)—which are quite similar to one another. A quick look at the latter fund shows some familiar names: over 30% of the fund is composed of Apple, Microsoft, Google, Facebook, and Tesla. By holding Marriott International Inc, KCGIX invests in casinos across the world. By holding Abbott Laboratories, the fund invests in a company that produces abortifacients. The Knights invest in Oracle, which supplies equipment to the Chinese Communist surveillance systems and donates to Planned Parenthood; in Nike, whose compliance with the Chinese Communist Party and production of inhumane working conditions for their employees are infamous (especially next to their “brave” stand for the BLM movement in the States); in Electronic Arts (aka EA Games) who produce pornographic and violent games. Adding all of these companies together, 36% of the KCGIX fund is scandalous and far removed from Saint John Paul’s demand that our investments build up a civilization of love.
Non-Catholic Funds
New Polity also offers a critical analysis of the largest non-Catholic funds, funds that Catholic universities (again, Newman Guide and other), dioceses, and apostolates often invest in. These funds are substantially larger than the three listed above, holding thousands of companies. While they hold many more companies that engage in nefarious banking activities, abortions, pornography, and the like, their overall percentage of holdings in companies actively opposing Catholic social teaching is not far off the Catholic ones, ranging from 36–40%.
It is often said, by those who would point out the lamentable gap between Catholic teaching and practice, that the divorce rate in the Church is just as bad as the divorce rate outside of it. Sadly, it seems to be the same case with our investments as well.
Investing in the Kingdom
In the various Catholic funds mentioned—CATH, AVEGX, and KCGIX—we have a host of seriously questionable investments, ranging from 27%–39% of each. I reached out to the managers of these funds. Ave Maria insisted that they had upheld their standards—“Investments are made only in companies that do not violate core teachings of the Catholic Church”—but refused to offer rebuttals to the sources I sent them. I received no reply from the others.
Foremost in the defense of blind investing is the phrase “remote cooperation,” which many Catholics include—albeit vaguely—within their moral reasoning. Here, the guilt one incurs for participating in an evil action depends on how removed one is from the evil act. One may directly murder; hire a hitman to commit a murder; give money to a man one knows is hiring a hitman to commit a murder; support the business of a man known to give money to other men known to hire hitmen, and so on, in a gradually decreasing “proximity” from the murder itself. One could place a particular blind investment within this scale. But this misses the context of all cooperation in evil, however remote: that it is only permissible for a grave reason. If I need to feed my family and the only place to buy food is at a large grocery store that utilizes child slaves, then I may remotely cooperate in the evil act of child slavery. Why? Because I need the food. As Pope Innocent IX phrased it, there would be an immediate loss of a good. But investment is never necessary. Money invested is definitionally in excess. There may come a time when an American can only feed his family by investing in the stock market, but it has not yet come to pass. And without a sufficiently grave reason for investing in a company, no investment in evil can be justified.
Besides, blind investing motivates Catholics to look away from the very information they would need in order to determine the proximity of their acts of investment to the evil in which they participate. Some of the companies we have highlighted are blatantly engaged in activities that inherently oppose the Church; others of them merely have serious accusations against them—accusations that need to be answered. The problem with ETFs, mutual funds, and blind investing generally is that we rarely know who we are invested in, and never investigate the companies we promote through our investments—we do not know how direct and indirect, formal or material, their cooperation is in evil, much less our own.
And if the popes are correct, and every investment is a moral, cultural, world-building act, shouldn’t we pursue more than just technical licitness and the bare minimum of “remote cooperation” in evil? Not just the nefarious 27–39% of our investments, but the rest of our funds should be the object of our conscience. Why, after all, are we dedicated to the success of companies such as Target, Accenture, Qualcomm, Coca-Cola, and Broadridge Financial Solutions? We may be able to prove, in the final analysis, that they do not support abortion, embryonic stem cell research, or some other grave evil, but is the world they are building the kind of world in which families and the Catholic faith flourish? Admittedly, selling off these accounts and finding Christian companies—companies not just avoiding evil but actively doing good—is terrifying. Their returns are not as good. But returns are not our lodestar. Christians must include more than money within their calculations, and be willing to lose in investments what they gain in righteousness.
This should come as no surprise. Within the realm of sexual ethics, the Christian is exhorted to live in a manner strikingly different than the rest of the world. The world says pornography is fine, even healthy. The Church calls it demonic. The world promotes fornication and even adultery, so long as one is “following your heart.” The Church calls us to chastity—and in many cases complete celibacy. The world floods the market with images of women to lust after, but Christ says that, “anyone who looks at a woman to lust after her has already committed adultery with her in his heart.” With regards to monetary allocations, Christ calls us to a similarly radical, sacrificial way of living that the world cannot understand. But we seem to have allowed Christ to transform the sexual sphere while excluding him from the financial sphere.
Our world has created a financial empire that is hard to break free from. Keeping our money in a savings account leaves us vulnerable to the hidden yet significant tax of inflation and the federal devaluation of the dollar. Investing in local, Catholic ventures is a brilliant alternative—but not everyone has that opportunity. Buying precious metals, land, property—while they often avoid the moral difficulty of investing in increasingly political companies—often seem dissatisfying next to the robust financial arsenal that the wealthiest Americans have at their disposal. Choosing material insecurity is terrifying—especially for those of us who have clambered out of it already. If a good answer to this problem can only be one which does not necessitate any sacrifice of money, then there is no good answer. Thankfully, Christians have been prepared by the Gospel to make sacrifices. Let us consider the life of Christ, the Church’s praise of the poor (St. Joseph’s title: Lover of Poverty), Christ’s command not to be anxious, and the mentality of Catholic martyrs who lived in the financially advanced Roman Empire. And let us prepare our kids, instead of our 401(k)s, to take care of us during our retirement.
On Ave Maria Fund’s profile page, they state that they “place equal emphasis on investment performance and moral criteria in selecting securities,” summarizing the dream of many for a richly rewarded and yet righteous investment portfolio. Pope Francis and the Bishops, themselves victims of this dream, are suggesting that we wake up—that Catholics place an unequal emphasis on moral criteria over investment performance, with the positive purpose of building up the Kingdom of God at the expense of the City of Man. Arguably, Christ suggested this long ago, when he said “You cannot serve both God and Mammon.” Harsh words, but a dive into the world of investing, Catholic or otherwise, bears them out.